7 key steps for the governance agreement for nonprofits

Often sat on the edge of a sports club, it's easy to think that governance can be a chore and should not have priority. This attitude can be fraught with danger both communal and personal.

Because we Commissions / Committees?

Most of the non-profit composed of members and tabs. Some may also have employees and management that make day to day work.

Because members are not usually involved in day to day or week to week operations, they shall appoint committees to run the organization.

The Council is responsible for two major areas:


Overall Performance (Strategic Management), and
Overall Compliance (obey the law).
For the national focal points, the establishment in which the objects of general organization (ie the reason for the existence of the organization and what we are trying to achieve). Boards will be evaluated on their performance to the extent that assisted the organization to achieve these objectives. Directors must also be aware of the specific powers set out in the Constitution. Administrators should be aware of the extent and any limitations in the powers. Before taking a decision, they need to know if that is permissible within the remit of the organization and if the decision is in the best interests of the organization of objects. In order to monitor the results and compliance, the Council will implement a system to control and monitor (ie govern) the organization. On the one hand, it is fine if the organization is perfect conformity without a strategic direction. On the other hand, it is fine if you have great strategic direction but to break the law. Both are mandatory! Keyboard functions can be summarized as follows *:


The strategy formulation;
Monitoring of organizational performance;
Risk Management;
Compliance;
Policy formulation;
Networking;
Communication with stakeholder groups;
Crisis Control;
Effective governance.
* Australian Institute of Company Directors in 2006.

With this in mind, here are 7 key steps to understanding of governance:

Key Step # 1 - make responsible decisions

Directors have a duty (both legal and common law) to act honestly and in good faith (trust). If these functions are ignored, the directors may incur personal liability and sometimes criminal convictions.

Decisions must be responsible and in the best interest of the organization (always with reference to its objects). They should never make decisions that give them a personal benefit or not to use his position. They should also understand that the board documents and discussions are confidential.

Key Step # 2 - elect the members of the Board

Board members should be actively involved in the organization contributing strongly and positively. All must attend meetings of the board and read the newspapers on board well before the meeting so that they are well prepared to make suggestions to the meeting.

Members of the Board not to take good decisions if you are not familiar with legal requirements such as legislation to raise funds, tax status and filing requirements and important deadlines. They keep track of the financial position of the organization and its direction. Ensure there are strong relationships and monitoring systems and are aware of the competence of individuals, providing them with information before making a decision.

Key Step # 3 - Hold meetings of the Board effective

Documents including the common council, minutes earlier, and all the background information that must be considered when it comes to certain items during the meeting coming up, should be sent to all directors well before the meeting so that they have time enough to read the newspapers and then contribute significantly to the discussion.

Key Step # 4 - Be aware of conflicts of interest procedures

Board members should be well aware of the procedures relating to conflicts of interest. Before making a decision or a matter is discussed, it is good policy (and in some cases provided by law) that the directors declare an interest. The policy should be formulated to determine whether they are present at the meeting when the matter is discussed or decided it (or they need to vote). All this should be on record so that it can be seen that the policy was followed. Sometimes this policy is contained within the constitution.

The fundamental step # 5 - Finance Monitor for insolvency

Directors must ensure that the organization can pay its debts as and when they fall due. Failure to monitor this can bring to the organization incurring the costs and liabilities held for trading while insolvent. If this can be demonstrated, administrators may be asked to foot the bill personally.

Key Step # 6 - Consider Stakeholders

Administrators should be aware of who are stakeholders organizations. Stakeholders are those who have an interest in the organization's performance and may include members, funding bodies, government departments, donors and sponsors.

Policies should be developed to identify how these stakeholders will be managed and communicated with. Inability to develop strong bonds with stakeholders could threaten the existence of the organization.

The fundamental step # 7 - Risk Management

The Board should identify, assess, monitor and manage risks to the organization. All the necessary assurances should be taken with adequate cover (use a broker that can help with this). Strong internal controls should be primarily to reduce the risk of fraud and error .......